Understanding Medicare Part D

The "donut hole" was a coverage gap where you paid more for drugs after reaching a spending threshold. It has effectively been eliminated. In its place, 2026 Part D includes a hard out-of-pocket cap of roughly $2,100 on covered drugs — once your spending reaches it, covered drugs cost you $0 for the rest of the year. That's meaningful protection for people on expensive medications, and a big simplification over the old multi-stage gap. (CMS PY2026; verify current figures on Medicare.gov.)

The standard Part D deductible for 2026 is $615 — the amount you pay yourself before the plan starts sharing your drug costs. Some plans set a lower deductible, often around $300 to $350, and a few waive it on certain tiers. After the deductible, you pay a share until your out-of-pocket spending hits the roughly $2,100 cap, then covered drugs are $0 for the rest of the year. We compare deductibles and tiers across the plans we offer. (CMS PY2026; verify current figures on Medicare.gov.)

A formulary is the list of prescription drugs a Part D plan covers, organized into pricing tiers. It's the most important thing to check, because a plan only helps with drugs that are on its list, and the tier a drug lands on sets your cost. The same medication can be a low tier in one plan and a high tier in another. That's why comparing formularies — not just premiums — is how you find the plan that covers your specific prescriptions affordably.

Because each plan builds its own formulary and assigns its own tiers and rules. Your medication might be a preferred generic (low cost) in one plan and a non-preferred or specialty tier (higher cost) in another, and one plan might require prior authorization or step therapy while another doesn't. Plans also negotiate their own pricing. This is exactly why the lowest-premium plan often isn't the cheapest for you — your personal drug list determines your real cost.

If you go 63 or more days in a row without creditable drug coverage after you're first eligible, Medicare adds a permanent penalty to your Part D premium — about 1% of the national base beneficiary premium for each month you went without, for as long as you have Part D. Creditable coverage means coverage at least as good as a standard Part D plan. The penalty is lifelong, which is why enrolling on time, or keeping creditable coverage, matters even if you take no drugs now.

Often yes, to avoid the lifelong late-enrollment penalty. If you skip Part D when first eligible and later need drug coverage, you may pay a permanent surcharge on top of your premium. A low-cost plan now acts as inexpensive insurance against both future prescriptions and that penalty. The exception is if you already have creditable drug coverage — for instance through certain employer or VA plans — in which case you can delay without penalty. We can check whether your current coverage counts.

About 113,372 South Dakotans carry a standalone Part D prescription drug plan (CMS PY2026; verify current figures on Medicare.gov). That large number reflects how many people pair Original Medicare with a separate drug plan rather than getting drug coverage bundled into a Medicare Advantage plan. Standalone Part D is the natural partner to a Medicare Supplement policy. We compare the standalone drug plans we offer against your specific prescriptions to find your lowest total annual cost.

Yes. During the Annual Enrollment Period from October 15 to December 7, you can switch your standalone Part D plan for the next year, with changes taking effect January 1. Because plans adjust their formularies, tiers, deductibles, and pricing yearly, the plan that was cheapest this year may not be next year. We review your prescriptions against the plans we offer every fall so you stay on the lowest-cost option for the drugs you actually take.

They're rules some Part D plans use to manage certain drugs. Prior authorization means the plan must approve a medication before it'll cover it. Step therapy means you may have to try a lower-cost alternative first before the plan covers a pricier one. Neither is necessarily a dealbreaker, but both affect your experience at the pharmacy. We flag these rules on the plans we offer so you know up front whether your specific drugs come with any extra hoops.

Yes, often significantly. Many Part D plans have preferred pharmacies where your copays are lower, so whether you fill prescriptions at a chain, a grocery pharmacy, or by mail order can change your cost. When we compare the plans we offer, we factor in your preferred Sioux Falls-area pharmacy along with your drug list and the $615 deductible, so the plan we recommend is the cheapest for how and where you actually fill your prescriptions. (CMS PY2026; verify current figures on Medicare.gov.)